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01/09/2017

ESMA opinion on supervising BREXIT-related relocations from UK

On 31 May 2017, the European Securities and Markets Authority (ESMA) published an opinion setting out nine principles to support supervisory convergence in the context of relocations from the UK, following the UK's decision to leave the EU.

On 31 May 2017, the European Securities and Markets Authority (ESMA) published an opinion setting out nine principles to support supervisory convergence in the context of relocations from the UK, following the UK's decision to leave the EU. The opinion is addressed primarily to national regulators – also known as National Competent Authorities (NCAs) – of the 27 Member States that will remain in the EU (EU27) but it will be relevant to firms considering relocating entities, activities or functions from the UK, including through use of delegation structures. The nine principles are:

1. No automatic recognition of existing authorisations;
2. Authorisations granted by EU27 NCAs should be rigorous and efficient;
3. NCAs should be able to verify the objective reasons for relocation;
4. Special attention should be granted to avoid letter-box entities in the EU27;
5. Outsourcing and delegation to third countries is only possible under strict conditions;
6. NCAs should ensure that substance requirements are met;
7. NCAs should ensure sound governance of EU entities;
8. NCAs must be in a position to effectively supervise and enforce Union law; and
9. Coordination to ensure effective monitoring by ESMA.